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A Surety That Pays A Claim Can Pursue A Negligent Party For Damages

Sunday, February 04, 2007 11:30 am

A Surety That Pays A Claim Can Pursue A Negligent Party For Damages

The Fifth U.S. Circuit Court of Appeals decided that a surety could pursue an engineering company for alleged negligence and contract breach, and that the surety possessed the same rights as the company whose losses it paid.

Panther Utilities of Mississippi, Inc. (Panther) and the Hancock County Water and Sewer District (District) contracted for Panther to build a sewage collection system. Panther obtained a bond from Lyndon Property Insurance Company (Lyndon). The District also contracted with DLA to be the project's engineer of record. DLA eventually terminated Panther and awarded the project completion project to another company. Lyndon filed suit against DLA, claiming that paying to fix and complete Panther's work -- which DLA had inspected and approved -- [...]

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